You’re a healthcare administration fellow at the prestigious Stanford Healthcare. You have been rotating through the various departments over the past nine months and now you

Comments Off on You’re a healthcare administration fellow at the prestigious Stanford Healthcare. You have been rotating through the various departments over the past nine months and now you

Overview

The purpose of this assignment is to familiarize you with financial statements, the need to align the financials and the strategic direction of the firm, and the process of performing horizontal and vertical analyses of a company’s balance sheets and income statements.

You will be provided with a scenario and a variances analysis. You will use the information in both to create a memo in which you demonstrate your audit financial statements and expenditures based on organizational priorities.

Instructions

Scenario

You’re a healthcare administration fellow at the prestigious Stanford Healthcare. You have been rotating through the various departments over the past nine months and now you have the honor of working under the mentorship of Chief Financial Officer Linda Hoff.

Stanford Medicine includes Stanford Healthcare, Stanford Children’s Hospital, and Lucile Packard Children’s Hospital Stanford. This organization uses an integrated approach to strategic planning, which incorporates jointly agreed-upon strategic priorities from its various entities. It also ensures a high degree of congruence in strategic focus by each entity.

Before outlining the strategic priorities for Stanford Medicine, it is important to note that a firm’s directional strategy comprises three discrete yet interwoven components: vision, mission, and goals (or, in this case, priorities). Armed with this knowledge, you have familiarized yourself with the vision, mission, and priorities of Stanford Medicine. Below is what you found.

When examining a company’s financials, it is prudent to keep the directional strategy of the company in mind. After all, in order to advance many strategic priorities, which include fulfilling the mission and positioning the organization to achieve its vision for the future, proper management of the firm’s scarce resources is vital. Failure to properly manage the financial performance of the organization can compromise the company’s ability to maintain a competitive advantage in the marketplace.

Our Vision

Precision Health: Predict. Prevent. Cure. Precisely.

We will heal humanity through science and compassion by leading the biomedical revolution in precision health.

Our Mission

Improving Human Health Through Discovery and Care.

Through innovative discovery and the translation of new knowledge, Stanford Medicine improves human health locally and globally. We serve our community by providing outstanding and compassionate care. We inspire and prepare the future leaders of science and medicine.

Strategic Priorities

A collaborative endeavor involving the entire community, the Stanford Medicine integrated strategic planning process yielded a framework that is human-centered and discovery-led, focused on three overarching priorities for our enterprise.

By enhancing our strengths and achieving our goals in these priority areas, we will amplify our preeminence and remain uniquely positioned to lead the biomedical revolution in precision health, ensuring our continued ability to guide healthcare through significant global changes.

Value Focused

Provide a highly personalized patient experience.

Ensure a seamless Stanford Medicine experience.

Digitally Driven

Amplify the impact of Stanford innovation globally.

Deliver human-centered, high-tech, high-touch care and revolutionize biomedical discovery.

Lead in population health and data science.

Uniquely Stanford

Accelerate discovery in and knowledge of human biology.

Discovered here, used everywhere: advanced fundamental human knowledge, translational medicine, and global health.

Ensure preeminence across all our mission areas.

Variance Analyses 

Normally, managers are expected to examine positive and negative variances, and then speculate as to possible explanations for the observed variances. Following this initial assessment, managers would be expected to dig deeper into those variances of greatest concern to the organization to uncover the actual causes for the variances, and then implement necessary corrective actions. Digging into all variances would be costly and, quite frankly, a misuse of time and energy.

The CFO asked one of her financial analysts to conduct a variance analysis of the company’s consolidated balance sheets and income statements for fiscal years 2015, 2016, 2017, and 2018, which has been completed. The analyst determined the variances for each account (line item) captured in the financials. Now that this first step has been accomplished, the CFO would like you to pay particular attention to the negative variances contained in the spreadsheet and focus on those variances you believe to be potentially the most impactful to Stanford.

The financial analyst completed your variance analysis over time, which is referred to as a horizontal analysis, and then proceeded to create a common-size balance sheet and income statement for each of the four fiscal years (2015-2018). The common-sized financials are captured in the provided spreadsheet.

Financial Management and Strategic Direction

Once you’ve completed your horizontal and vertical analyses of the financial statements, you should be able to get a sense of how well management has managed the financial resources of the company in support of its strategic direction. In business, the strategic direction should be evident in its vision and mission statements, and strategic priorities. The strategic priorities should support the company’s mission, and the mission should help advance the firm’s vision for the future. Failure to effectively manage the company’s financial. 

Based on the provided scenario, create a 3-4 page business memorandum to Linda Hoff, Stanford’s CFO. For guidance on writing a memo, take a look at this Sample Memo [DOCX] Download Sample Memo [DOCX].

In your memo, codify your findings and interpretations from the horizontal and vertical analyses and the level of alignment in the company’s fiscal management and strategic direction. Include the provided Excel spreadsheet you used to complete your analysis as an attachment to the memo. In this memo, you will:

Review the year-over-year variances contained in the audited Stanford balance sheets and income statements for fiscal years 2015-2018 in the  Week 5 Assignment Spreadsheet [XLSX] Download Week 5 Assignment Spreadsheet [XLSX]. You’ll be expected to pay particular attention to the negative variances (color-coded in red) that you believe to be potentially the most impactful to Stanford and provide a rationale for that belief.
Hypothesize as to the reasons for the negative variances. Be sure the hypothesis is supported by evidence from the scenario, the balance sheets, and income statements.
Explain the proportional changes in the common size results over the four fiscal year time frame and identify notable changes in the ratios. Also include a hypothesis, supported by a rationale, to suggest why these anomalies may exist.
Identify notable patterns and variances that warrant further investigation and justify both with evidence from the three-year period. Specify the potential consequences of the variances to justify the need to examine these variances further.
Assess whether the vision, mission, and goals of the organization are aligned with its current financial position and provide an explanation of why it does or does not align. Provides specifics from the variance analysis to support the assessment.

cf_week_5_assignment_spreadsheet.xlsx


cf_bc_sample_business_memo.docx

Balance Sheets

Stanford Health Care Consolidated Statements of Operations and Changes in Net Assets Years Ending August 31, 2015, 2016, 2017, and 2018

Common Size Balance Sheets Years Ending August 31, 2015, 2016, 2017, and 2018

Assets

% of Change between 2018 & 2017
2018 ($)
% of Change between 2017 & 2016
2017 ($)
% of Change between 2016 & 2015
2016 ($)
2015 ($)
2018 (%)
2017 (%)
2016 (%)
2015 (%)

Current assets:

Cash and cash equivalents

-8%
652,256
3%
710,109
45%
690,460
475,677
9.0%
11.4%
12.0%
8.6%

Short term investments

68%
391,314
125%
233,533
2%
103,627
101,677
5.4%
3.7%
1.8%
1.8%

Patient accounts receivable, net of allowance for doubtful accounts

2%
623,077
9%
610,734
2%
559,933
550,721
8.6%
9.8%
9.7%
10.0%

Other receivables

11%
79,036
-24%
71,112
23%
92,961
75,427
1.1%
1.1%
1.6%
1.4%

Inventories

4%
58,884
13%
56,559
16%
50,016
42,935
0.8%
0.9%
0.9%
0.8%

Prepaid expenses and other

24%
52,886
17%
42,528
2%
36,273
35,486
0.7%
0.7%
0.6%
0.6%

Total current assets

8%
1,857,453
12%
1,724,575
20%
1,533,270
1,281,923
25.7%
27.7%
26.6%
23.2%

Investments

357%
509,781
-16%
111,664
3%
132,273
127,860
7.1%
1.8%
2.3%
2.3%

Investments at equity

22%
80,989

66,255

1.1%
1.1%
0.0%
0.0%

Investments in company managed pools

9%
1,400,839
-2%
1,287,193
-9%
1,316,489
1,440,352
19.4%
20.7%
22.9%
26.1%

Assets limited as to use, held by trustee

-100%

-75%
58,134
-59%
235,788
580,701
0.0%
0.9%
4.1%
10.5%

Property and equipment, net

14%
3,279,048
19%
2,869,346
25%
2,401,880
1,923,465
45.4%
46.1%
41.7%
34.9%

Other assets

-23%
86,739
-18%
112,445
-16%
137,637
163,578
1.2%
1.8%
2.4%
3.0%

Total assets

16%
7,214,849
8%
6,229,612
4%
5,757,337
5,517,879
100.0%
100.0%
100.0%
100.0%

Liabalities and net assets

% of Change between 2018 & 2017
2018
% of Change between 2018 & 2017
2017
% of Change between 2018 & 2017
2016
2015
2018
2017
2016
2015

Current liabilities:

Accounts payable and accrued liabilities

46%
449,192
-8%
307,899
19.1%
335,995
282,134
6.2%
4.9%
5.8%
5.1%

Accrued salaries and related benefits

-18%
209,490
8%
255,759
16.7%
236,819
202,859
2.9%
4.1%
4.1%
3.7%

Due to related parties

39%
98,942
17%
71,429
41.5%
61,308
43,324
1.4%
1.1%
1.1%
0.8%

Third-party payor settlements

90%
34,474
-21%
18,149
154.5%
22,948
9,018
0.5%
0.3%
0.4%
0.2%

Current portion of long-term debt

9%
14,505
-3%
13,335
-1.3%
13,756
13,932
0.2%
0.2%
0.2%
0.3%

Revolving line of credit

-100%

ERROR:#DIV/0!
135,000
ERROR:#DIV/0!

0.0%
2.2%
0.0%
0.0%

Debt subject to short-term remarketing arrangements

0%
228,200
0%
228,200
0.0%
228,200
228,200
3.2%
3.7%
4.0%
4.1%

Self-insurance reserves and other

20%
54,933
6%
45,854
23.8%
43,232
34,918
0.8%
0.7%
0.8%
0.6%

Total current liabilities

1%
1,089,736
14%
1,075,625
15.7%
942,258
814,385
15.1%
17.3%
16.4%
14.8%

Self-insurance reserves and others, net of current portion

7%
139,841
10%
130,816
-1.1%
118,994
120,364
1.9%
2.1%
2.1%
2.2%

Swap liability

-26%
182,527
ERROR:#DIV/0!
245,966
ERROR:#DIV/0!

2.5%
3.9%
0.0%
0.0%

Other long-term liabilities

292%
122,944
-91%
31,363
51.4%
355,683
234,855
1.7%
0.5%
6.2%
4.3%

Pension liability

-87%
6,650
-21%
51,745
27.8%
65,463
51,220
0.1%
0.8%
1.1%
0.9%

Long-term debt, net of current portion

44%
1,711,967
-3%
1,189,529
-1.3%
1,220,789
1,237,347
23.7%
19.1%
21.2%
22.4%

Total liabilities

19%
3,253,665
1%
2,725,044
10.0%
2,703,187
2,458,171
45.1%
43.7%
47.0%
44.5%

Net assets:

Unrestricted:

Stanford Health Care

14%
3,285,398
17%
2,871,113
-0.7%
2,449,037
2,467,393
45.5%
46.1%
42.5%
44.7%

Nonconrolling interests

-15%
18,727
10%
22,060
-12.4%
20,133
22,979
0.3%
0.4%
0.3%
0.4%

Total unrestricted

14%
3,304,125
17%
2,893,173
-0.9%
2,469,170
2,490,372
45.8%
46.4%
42.9%
45.1%

Temporarily restricted

8%
648,826
5%
603,251
2.7%
577,086
561,642
9.0%
9.7%
10.0%
10.2%

Permanently restricted

1%
8,233
3%
8,144
2.6%
7,894
7,694
0.1%
0.1%
0.1%
0.1%

Total net assets

13%
3,961,184
15%
3,504,568
-0.2%
3,054,150
3,059,708
54.9%
56.3%
53.0%
55.5%

Total liabilities and net assets

16%
7,214,849
8%
6,229,612
4.3%
5,757,337
5,517,879
100.0%
100.0%
100.0%
100.0%

Income Statements

Stanford Health Care Consolidated Statements of Operations and Changes in Net Assets Years Ending August 31, 2015, 2016, 2017, and 2018

Common Size Income Statements Years Ending August 31, 2015, 2016, 2017, and 2018

% of Change between 2018 & 2017
2018 ($)
% of Change between 2017 & 2016
2017 ($)
% of Change between 2016 & 2015

The post You’re a healthcare administration fellow at the prestigious Stanford Healthcare. You have been rotating through the various departments over the past nine months and now you first appeared on Tutorie.

Get 30% off your orders today

X
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!